TUI University Winter 2010
External Environmental Analysis
Case Assignment Module 2
This external analysis is critical in the development of a well rounded, cohesive strategic plan and will enable the JM Smuckers Company to gain a more comprehensive understanding of the current external operating environment and situational awareness of both future threats and opportunities. This analysis establishes a basic industrial framework, and then utilizes Porter’s 5-Forces model and PEST analysis in attempting to develop a common understanding of the industry and economic environmental threats and opportunities. Porter’s Five Force model indicates that the greatest threats and opportunities facing the J.M. Smuckers company are likely in the form of substitution in the specialty segments due to the emergence and growth of CSAs and farmers markets providing locally grown organic foods, and the threat to profit margins are due to the high degree of rivalry among food manufacturers across all product segments. The analysis also indicates that Smuckers can leverage its product depth and brand name to gain market share as consumers are driven towards value, and use its strong balance sheet to potentially seek additional products to further expand its broad product portfolio . The PEST analysis indicates that current political factors such as the national debt, state immigration laws, healthcare reform, social-cultural conditions driven primarily by the increasing demand to develop and utilize safer and greener energy, and emerging technology innovations will have the biggest impact on the global business environment. What should also be taken from this macro analysis is that rarely should an issue be considered solely a threat or opportunity. Instead every threat should be seen as an opportunity to distance the company from its competitors and every opportunity a chance to fall behind. The ability to understanding the threats and opportunities better than the competition should enable the development of mitigation strategies for threats, the creation of plans to exploit opportunities, and guide further industry and greater economic assessment for inclusion in strategic development that leads to greater competitive advantage. Intro
In attempting to develop and formulate a comprehensive strategic business plan, corporations need to assess both their internal and external environment. This is typically accomplished through SWOT analysis. In SWOT analysis the internal assessment focuses on strengths and weaknesses, while the external assessment focuses on opportunities and threats. The objective of this paper is to conduct an external analysis that will identify and provide insight into potential threats and opportunities facing the JM Smuckers Company and will facilitate strategic planning efforts. This external analysis should enable corporate planners to fully appreciate and understand the opportunities and threats that face the JM Smuckers Company and in turn facilitate the development of a strategic plan that incorporates mitigation strategies for threats and features resource utilization strategies that exploit opportunities. This analysis will include setting the industrial framework or scope of the J.M. Smuckers company analysis, an industry environment analysis using Porter’s 5-Forces model, and a greater business environment analysis utilizing PEST analysis, and conclude with the threats and opportunities that face the JM Smuckers Company.
In order to identify and comprehend the opportunities and threats to the JM Smuckers Company, it is important to establish a framework for the external assessment. This will enable the analysis to cull the seemingly limitless threats and opportunities and focus on those that are more relevant. This framework will be comprised of a company overview and establishment of critical facts from the...